The cryptocurrency market experienced a significant shake-up in recent days following the sudden plunge of Bitcoin, resulting in a loss of $100 billion in its total value. This descent, which brought the market capitalization down from $1.82 trillion to $1.71 trillion, elicited diverse reactions and speculations among investors and industry experts.
It is crucial to note that such fluctuations are considered normal in a highly leveraged market, where the use of borrowed funds for investment is common. Before this drop, there had already been a decrease in funding rates and open interest in crypto derivatives, indicating a potential imminent adjustment.
Technical analyst ‘CrediBULL Crypto’ characterized this correction as part of the normal course of the market and not as an indicator of overheating. According to him, liquidations like these are regular events that should not cause concern.
In terms of figures, approximately $700 million was liquidated, mostly from long positions, with Bitcoin being the most affected cryptocurrency. Analyst Willy Woo pointed out that prolonged demand in the system was reaching elevated levels, suggesting a possible excess.
The Fall of Bitcoin May Have Been a Result of an Overreaction to Rumors
Speculation arose that this decline could have been influenced by a statement from Matrixport, predicting that the U.S. Securities and Exchange Commission (SEC) would not approve any Bitcoin exchange-traded funds (ETFs) in the current week. Despite this pessimistic forecast, experts maintain cautious optimism, especially in anticipation of the decision on the Ark 21 Shares ETP scheduled for January 10. A potential rejection on that date could lead to further price drops for Bitcoin, possibly reaching the $30,000 mark.
On a broader scale, tensions in the market persist due to key liquidation levels for Bitcoin at $44,300 and $46,250. At this moment, according to data provided by CoinGecko, BTC is trading at $43,105 after losing 5.6% of its value in the last day. Uncertainty regarding the SEC’s stance on BTC ETFs keeps volatility high, causing rapid changes in investments and contributing to the current market turbulence.
Despite concerns and recent declines, some analysts maintain confidence that BTC ETFs will ultimately be approved by the SEC, dismissing the recent market fall as an exaggerated reaction to unconfirmed rumors. With the deadline for the Ark 21 Shares ETP application just around the corner, investors remain attentive to upcoming regulatory decisions that could influence the market’s direction.